18 0 10 20 30 40 50 60 70 80 90 100 Answer the following

18 % % . 0 10 20 30 40 50 60 70 80 90 100 Answer the following questions using the production possibilities frontier diagram shown. Assume the community whose production possibilities are shown has no other productive or valuable activities to engage in and they prefer more of both goods to fewer of them. Which of the marked locations A, B, C, D, or E represents an inefficient level of output? Which of the marked locations A, B, C, D, or E represents a currently infeasible level of output? Assume the community is currently operating at point A in the diagram. If they switched all of their resources into collecting coconuts, how many additional coconuts will they produce? True or False: Moving from point in the diagram to point B in the diagram will always be an improvement Explain your answer to the True/False question:

Solution

a) The point below the PPF represents the inefficient production level. That is represented by point \"A\".

b) Point \"E\", above the PPF, represents the unachievable level of output.

c) 30, they can achieve an extra of 30 units of coconut if they use all their resources.

d) \"True\", moving from an inefficient point to an efficient point is always an improvement.

e) Point A is inefficient point i.e. wastage of resources. if the production increase or the firms become efficient it is always beneficial.